On December 20, 2016, the District of Columbia Council passed the Fair Credit in Employment Amendment Act of 2016 (B21-0244) (the “Act”) which, if enacted, would amend the D.C. Human Rights Act of 1977 to prohibit employers from discriminating against job applicants and current employees based on their credit information.  On February 2, 2017, the Council transmitted the Act to Mayor Muriel Bowser for final approval.  Mayor Bowser has until February 16, 2017 to approve or veto the Act.

If enacted, the Act will prohibit, with certain exceptions, D.C. employers from “directly or indirectly requir[ing], request[ing], suggest[ing], or caus[ing] any employee [or applicant] to submit credit information, or us[ing], accept[ing], refer[ring] to, or inquir[ing] into a prospective or current employee [or applicant’s] credit information.” The Act defines “credit information” as “any written, oral, or other communication of information bearing on an employee’s creditworthiness, credit standing, credit capacity, or credit history.”

The Act does permit D.C. employers to inquire into and obtain an applicant or employee’s credit information in certain limited circumstances. These include:

1. Where the employer is required by existing D.C. law to ask for credit information;

2. Where the employee is required to possess a security clearance under D.C. law;

3. Employees within financial institutions if the position involves “access to personal financial information”; and

4. Where an employer requests or receives credit information by way of a “lawful subpoena, court order, or law enforcement investigation.”

The D.C. Office of Human Rights will investigate charges of violations of the Act. After a hearing, if the Commission on Human Rights determines that a credit inquiry violation has occurred, the employer must pay the complainant a $1,000 fine for the first violation, $2,500 for the second violation, and $5,000 for each repeat violation.  As such, the Act provides for a similar “bounty”-like program as found in D.C.’s 2014 Fair Criminal Record Screening Amendment Act.  That program has encouraged individuals to look for employers in violation of the law and file charges in order to reap financial reward.  However, unlike the Fair Criminal Record Screening Amendment Act, individuals will also have a private right of action for violations of the Act, just as they would for any other unlawful discriminatory employment practice under the D.C. Human Rights Act.

Should the Act be approved by the Mayor, D.C. would join 11 states, including California, Illinois, and Maryland, as well as some localities, including New York City, that have enacted similar laws limiting the use of credit checks during the hiring process for private employers.

We will continue to track this legislation in the coming weeks and months as it is reviewed both by the Mayor and, should it be approved, by Congress. Employers that utilize credit checks as part of their hiring or employment practices should carefully monitor these developments and assess whether changes to their practices will be necessary in the likely event that the Act becomes law.